If we really care about the poor, shouldn’t we want better official data on poverty?

aeiBy Nicholas Eberstadt

Social policy in America is no longer a small scale venture. At this writing, US government transfers of income, goods and services to individuals in our country run at about $2.5 trillion a year. Of that total, over one trillion dollars is expressly targeted for those officially designated to be in need. And this is only the value of the transfers themselves. The administrative costs of managing the programs in question increase the total budget for our social and anti-poverty programs by many additional hundreds of billions of dollars.

Put another way: our government is allocating more resources to addressing domestic need and deprivation than the entire GDP of France — the world’s sixth largest economy.

shutterstock_192040817MeasuringPovertyBut there is a jarring mismatch in America today between the vastness of the monies mobilized in the name of the vulnerable on the one hand, and the meagerness of our efforts to generate the basic information on need and misery on the other. One might think that a truly compassionate society would demand detailed, accurate and useful data to guide anti-poverty efforts and improve social outcomes. It is a shame — some might say a scandal — that we as a nation have manifestly failed to do so. Indeed, we have largely neglected the task of generating policy-relevant data about the condition of our poor and vulnerable for the past 40 years.

Exhibit A in this ongoing national disgrace, of course, is the official “poverty rate,” which was unveiled at the launch of the War on Poverty half a century ago, and whose latest annual figures will be released by the Census Bureau today.

Ingenious as it may have been at the time, given the woeful paucity of official data pertaining to poverty back in the 60s, the official poverty rate is a positive embarrassment today. The poverty rate manifestly cannot do the single thing it was intended for: to count the number of people in our country subsisting below a fixed and absolute “poverty line.”

Among its many other shortcomings, this index implicitly assumes that a family’s annual reported income is identical to its spending power—thus any household with income below a certain level was automatically deemed to be in poverty that same year. But income and spending patterns no longer track for the lowest income strata in modern America. According to the latest data from the Bureau of Labor Statistics (July 2013-June 2014), the bottom quintile of US households spent 130% more than their reported pretax income.

The disparity between spending and income levels for poorer Americans has been gradually widening over time — meaning income is an ever less reliable predictor of material poverty. Yet the Census Bureau keeps cranking out this highly misleading measure year after year.

Why does this happen? Because the Census Bureau is expressly instructed by our Congress to do so. And why does Congress so insist? One hint may come from the federal money trail. Nowadays federal payouts to localities all across the country are linked to the existing official poverty rate. Why risk losing federal funding through a better and more accurate poverty measure?

Big pressures are at play these days to keep an obviously broken poverty measure front and center in national anti-poverty policy. Needless to say: this is Washington politics at its very cynical worst.

If we really cared about the least among us, shouldn’t our information-era government radically ramp up its commitments to documenting their plight? We could have not one, but many measures for quantifying poverty. We could run in depth, long term surveys of the American condition, tracking people’s income, spending, wealth and debts over time. And we could broaden our gaze beyond poverty per se to the matter of misery — woes like crimes and other afflictions that degrade the human condition irrespective of money itself.

Sad to say, the US has fallen behind a number of other OECD governments in the scope and quality of its official data concerning social wellbeing and human need. In fact, we have not really attempted a wholesale upgrade in such information systems for over forty years; not since Daniel Patrick Moynihan (later a four term US Senator from New York) championed a “social indicators” initiative during his stint as a Presidential adviser during the Nixon years.

A comprehensive upgrade of our governmental capacities to measure both poverty and misery in modern America will not come cheap. Its cost may run into the hundreds of millions of dollars a year.

But it is a false (and heartless) economy to skimp on the very expenditures that would help us much better understand the realities of need and despair in our nation. Improved data on poverty and misery are critical to understanding how we are doing as a society, and how we might be doing better.  A truly compassionate nation needs to be a well-informed nation, too.

Nicholas Eberstadt is a political economist and a demographer by training at AEI, He is  is also a senior adviser to the National Bureau of Asian Research, a member of the visiting committee at the Harvard School of Public Health, and a member of the Global Leadership Council at the World Economic Forum. He researches and writes extensively on economic development, foreign aid, global health, demographics, and poverty. 

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